Use Your Savings or a Higher Mortgage in the Netherlands? A Smart Guide for Expats (2026)

When buying a property in the Netherlands, many expats ask the same question: Should I use my savings for the purchase, or finance more through my mortgage? The answer depends on mortgage interest rates, mortgage interest tax deduction (“hypotheekrenteaftrek”), Box 3 wealth tax, and whether you benefit from the 30% ruling.

 

In this guide, we explain how it works, clearly and practically, so you can make a confident decision.

The Core Decision: Lower Mortgage or Keep Liquidity?

 

You have two main options. Either use your savings to reduce your mortgage or keep your savings and borrow more. Both strategies can be financially smart. The right choice depends on taxes, interest rates and your long-term plans.

 

Mortgage Interest Rates & Tax Rebate in the Netherlands

 

Your mortgage interest rate determines how expensive borrowing is.

 

• Higher rates → reducing your mortgage saves more interest.
• Lower rates → borrowing more may be relatively affordable.

 

But the interest rate alone does not tell the full story. You must look at the net cost after tax. If you choose an annuity or linear mortgage and repay it within 30 years, the mortgage interest is generally tax deductible in Box 1. This means the interest lowers your taxable income and your effective mortgage cost becomes lower. Example: If your mortgage rate is 4.0% and you receive tax relief, your net interest cost may effectively be closer to 2.7%, depending on your income tax bracket. This makes borrowing more attractive than it first appears.

 

Box 3 Tax: How Savings and Investments Are Taxed

 

In the Netherlands, savings and investments are taxed in Box 3 once they exceed the annual tax-free threshold. In 2026 this threshold is € 59,357 per person or if you have a fiscal partner the threshold is € 118,714. The system assumes a return and taxes that, even if your actual return is lower. This means that large savings balances can lead to annual wealth tax. And that reducing your savings by investing in your home may lower Box 3 tax.

 

For buyers without special tax status, this is an important consideration. But what if you have the 30% ruling? For expats benefiting from the 30% ruling who opt for partial non-resident taxpayer status, assets in Box 3 are generally not taxed during the period of the ruling. This changes the calculation significantly. If your savings and investments are not taxed, then there is less tax advantage in reducing your savings. Keeping investments may be more attractive. However, the 30% ruling is temporary. Once it ends, Box 3 taxation applies again. Long-term planning is essential.

 

Liquidity: The Overlooked Factor

 

Your home is not easily accessible capital. Savings are. Using all your savings to reduce your mortgage may leave you financially tight. Renovations, career changes or family plans require flexibility. Many expats prefer a balanced strategy:

 

• Keep an emergency fund.
• Use part of their savings.
• Optimize tax efficiency.
• Maintain long-term flexibility.

 

Financial comfort matters just as much as interest savings.

 

A Practical Example for Expats with 30% Ruling

 

Imagine the following is your case:

 

• € 70,000 in savings
• 4.0% mortgage interest rate
• Mortgage interest tax deduction applicable
• 30% ruling active for another 3 years
• 6.0% savings average investment portfolio return

 

Because your Box 3 assets are not taxed, keeping savings invested may make financial sense especially if you expect moderate investment returns. If your mortgage rate is 4.0% and you receive tax relief, your net interest cost may effectively be closer to 2.7%. If on the other hand you have your savings in an investment portfolio with an average return of 6.0% and you don’t have to pay any taxes on that in box 3 due to your ruling, then it makes more sense to keep you funds in your investments. But once your 30% ruling expires, the advantage to keep your funds in the investment portfolio in box 3 becomes smaller due to asset taxes, making it wise to consider shifting (some) of your savings towards your mortgage.

 

So, What Makes Sense for You?

 

When deciding whether to use savings or increase your mortgage in the Netherlands, consider:

 

• Your mortgage interest rate
• Whether you qualify for mortgage interest tax deduction
• Whether you benefit from the 30% ruling
• Your Box 3 position
• Your need for flexibility
• Your long-term plans in the Netherlands

 

The smartest strategy is the one that fits your full financial picture.

 

How We Help You Decide

 

At Independent Expat Finance, we look at everything together: your mortgage options, tax situation, savings, and future plans in the Netherlands. We explain the numbers clearly. You choose with confidence.

 

If you are buying a property and want to know whether using savings or borrowing more makes sense, book a free consultation. We guide you step by step.

Book a free mortgage intake meeting

 

Our team of mortgage advisors is ready to assist you in finding the right mortgage. Contact us today for a no-obligation consult and discover the many options available to you.